The Research On The Effect Of Incentive Executives Of Listing Corporation To Audit Fee

In recent years, with the rapid development of economy, the executive incentive problem has always been the focus in the circles of theory and practice. A wide range of social concerns the excessively high executive pay in listed companies. China’s listing Corporation executive pay increased year by year, some of the company’s executive compensation is far higher than the average level of the domestic listing Corporation, which caused extensive social and academic discussion. At the same time, China’s equity incentive plan while the late but in recent years the development of faster, the development of equity incentive attracts people’s attention. The proxy problem of shareholders and management of separation of ownership and operation in modern enterprise of the two rights, managers exist pursue personal benefit at the expense of shareholder issues, it will lead to moral hazard and adverse selection risk. Executive incentive is considered to be the effective method to solve the agency problem. Incentives will encourage managers to work more diligently, will promote the company’s operating performance improved. But the executive incentive may breeds self-interested behavior of executives, which is not conducive to business growth performance, especially equity incentive effect on firm may expand into multiples. Audit as an independent third party supervision mechanism plays an important role in the corporate governance. In the face of the executives of the potential self-interested behavior, the auditor can adjust the audit fees to control audit risk. Therefore, it can be combined with China’s actual situation, research the relationship between executive incentive and audit fees, which will not only enrich the theory of audit pricing, but also to improve the company’s salary system and protect the interests of investors have practical significance.The research content of this paper is divided into five parts. The first part is an introduction, mainly introduces the research background, significance and research methods, and then organize the domestic and foreign literature on executive incentive and audit fees, summarize the lack of previous studies and reviewed. The second part is the definition of related concepts and basic theory, defines the executives, executive incentive and audit fees of the related concepts, and elaborates the principal-agent theory, asymmetric information theory, contract theory, signal transmission theory and insurance theory. The third part of descriptive analysis of China’s A shares of listing Corporation executives incentive, summarizes the characteristics of China’s executive incentive mechanism, analyze the correlation between listing Corporation executive incentive and audit fees, and put forward the research hypothesis. The fourth part is the empirical analysis, this paper selects 2010-2014 China’s two stock markets of Shanghai and Shenzhen A shares of listing Corporation as the data sample, set variables and constructs two regression models, respectively research on the executive compensation incentive and equity incentive effect on audit fees, and use correlation analysis and regression analysis to discuss the research hypothesis. Research conclusion, listed company executives compensation and audit fees were significantly positive correlation, the improvement of executive compensation will lead to accounting firms to increase audit fees; listed company executive equity incentive and audit fees is negatively correlated, the levels of executive equity incentive provided high will make accounting firms to reduce audit costs. The fifth part draw conclusions based on empirical research and policy recommendations on this basis, while noting the lack of research, and the direction of future research.This paper from two aspects namely compensation incentive and equity incentive of executives to discuss its relationship with audit fee. This paper studies the problem of executive incentive listing Corporation from a new perspective, and established two regression models, which are executive monetary compensation and audit fees, executive equity incentive and audit fees, to study the influence of executive incentive on audit fees. The article draws conclusions from the empirical analysis, and put forward policy suggestions, and points out the important role of the supervision function of audit for executive behavior. This will help to enrich the relevant theory, in the hope of promoting the construction of the development of executive compensation system and the function of audit supervision.